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The Inevitable Debt Crisis Canada’S Not Talking About

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http://www.theglobeandmail.com/report-on-business/rob-commentary/the-inevitable-debt-crisis-canadas-not-talking-about/article29445969/

The coming crisis can be delayed but not averted. For example, in 2006, a change in government policy accelerated the incipient borrowing boom when 40-year amortization and zero-down payment guidelines were introduced for housing loans.

#CaveatEmptor

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http://www.theglobeandmail.com/report-on-business/rob-commentary/the-inevitable-debt-crisis-canadas-not-talking-about/article29445969/

The coming crisis can be delayed but not averted. For example, in 2006, a change in government policy accelerated the incipient borrowing boom when 40-year amortization and zero-down payment guidelines were introduced for housing loans.

#CaveatEmptor

Carney's first clusterf**k. The country's reverted back to sensible lending practices since he left. Not that it's going to help them much.

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"It's Turning Into A Ghost Town" - One In Five Calgary Offices Is Now Empty

calgary%20vacancy.JPG

As a result of the ongoing collapse of the Alberta energy economy, CBRE Canada estimates that Calgary's downtown office vacancy rate was 20.2% as of March 31, nearly twice as high as the 11.8% a year ago. This means that one in five offices is now vacant.

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Alberta Fires Worse for Canada Economy Than Katrina for U.S.

Intact Financial Corp. may post insured losses of as much as C$1.1 billion ($850 million) from the wildfires in Alberta, which could dent the Canadian economy harder than Hurricane Katrina hit the U.S. The devastation brought on by the wildfires is unprecedented. It’s likely to be the costliest natural catastrophe in Canadian history, Fitch Ratings said Monday in a statement. Industrywide insured losses could reach C$9 billion, according to reports from Bank of Montreal and others. The flames are scorching a region that’s home to oil and gas producers including Suncor Energy Inc. and Cnooc Ltd.’s Nexen. At least 1,600 homes and structures have been damaged.

Losses could be multiples higher than the Slave Lake fire, in part due to the greater average home price in Fort McMurray, Fitch said.

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In an article for Forbes published a few days ago, he says seven countries are most likely to suffer an economic crisis in the next one to three years: China, Australia, Sweden, Hong Kong, South Korea, Canada and Norway.

According to the McKinsey report below in Q2 2014 Canada's total debt to GDP was about 221% - a bit more than China's 2014 ratio at 217% (that 221% seems to exclude financial institutions - 247% including financial institutions compared to China's 282% including financial institutions in 2014).

http://www.mckinsey.com/global-themes/employment-and-growth/debt-and-not-much-deleveraging

Canada's GDP is about $1.7 trillion.

Since 2014 Canada's public/government debt rose to about $1.3 trillion = 76% then there's corporate, private etc debt on top.

There's recent evidence that China's recent total debt to GDP ratio seems to be increasing at about 40% a year but that seems to be the exception.

"Seven countries" - to be fair if you consider the ratio list in the McKinsey report there could be maybe another 17 countries to add to the list including the UK.

http://www.theglobeandmail.com/report-on-business/rob-commentary/the-inevitable-debt-crisis-canadas-not-talking-about/article29445969/

Canadians collectively owe more than 208 per cent of GDP and private debt to GDP grew more rapidly than the guideline between 2011 and 2016.

Private debt grew from 182 per cent of GDP to 208 per cent, well above the benchmark rate of growth for five years.

So 208% private debt plus 76% government debt = 284% and that would exclude corporate and financial institution debt. A pretty staggering ratio in itself.

Note:

Theglobeandmail private debt to GDP figures seem to be significantly higher than the household debt to GDP figures in the McKinsey report. They both claim reference to the BIS (the central banker's central bank) and apparently some of McKinsey's information is based on GS data (the squid of off balance sheet fame) amongst others so one just has to take ones choice of course. One way or another the debt figures are huge.

Edited by billybong

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According to the McKinsey report below in Q2 2014 Canada's total debt to GDP was about 221% - a bit more than China's 2014 ratio at 217% (that 221% seems to exclude financial institutions - 247% including financial institutions compared to China's 282% including financial institutions in 2014).

http://www.mckinsey.com/global-themes/employment-and-growth/debt-and-not-much-deleveraging

Canada's GDP is about $1.7 trillion.

Since 2014 Canada's public/government debt rose to about $1.3 trillion = 76% then there's corporate, private etc debt on top.

There's recent evidence that China's recent total debt to GDP ratio seems to be increasing at about 40% a year but that seems to be the exception.

"Seven countries" - to be fair if you consider the ratio list in the McKinsey report there could be maybe another 17 countries to add to the list including the UK.

So 208% private debt plus 76% government debt = 284% and that would exclude corporate and financial institution debt. A pretty staggering ratio in itself.

Note:

Theglobeandmail private debt to GDP figures seem to be significantly higher than the household debt to GDP figures in the McKinsey report. They both claim reference to the BIS (the central banker's central bank) and apparently some of McKinsey's information is based on GS data (the squid of off balance sheet fame) amongst others so one just has to take ones choice of course. One way or another the debt figures are huge.

As Reinhart and Rogoff stated debt is the most elusive economic measure. When you consider that up to 97% of money is created by the banking system this is hardly surprising.

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Reposted from another thread:

cashinmattress, on 23 Mar 2016 - 2:46 PM, said:snapback.png

I don't know about that. Household debt in Canada is terrible, and the cost of living has skyrocketed. Their household debt levels have never been higher actually.
http://business.fina...evels-pbo-warns
http://globalnews.ca...cket-next-year/
http://news.national...family-pays-12k
http://www.bloomberg...-flashing-again
http://www.nationalp...25-6b43ed98fff9
http://www.huffingto..._n_8135266.html

Toronto houses averaging 10x salary, Vancouver houses averaging 15x salary, based on median prices and median household salaries. Double those numbers for single earners on average wages.

Going back to the 90's, the mass influx of Chinese immigrants and their monies inflated all the desirable areas of Canada.

And their former bank governor, now ours, greatly exacerbated the credit market madness in mortgages.

Canada's houses are HEAVILY over valued, and their mortgage credit market is falling.

They are due a massive bust.

Big difference is that Canada is USA's #1 trading partner, and has some of the world greatest quantities of natural resources.

It also operates a federal system, with the regional economies tailored to their assets and geography.

The GDP breakdown of their economy isn't far from that of the UK though Agriculture 1.6%, Industry 28.9% , Services 70.5% ( UK Agriculture 0.6%, Industry 19.7% , Services 79.6%), but the GDP per head is marginally higher.

Their health care system is also in deep doodoo, with huge cost increases across the board and running on an unsustainable model.

Pension... well, they are massively underfunded as well. Exactly like the USA & UK.

So, like the other western nations, they are sleepwalking into a massive breakdown to society for everybody 40 and under as we are all living way beyond our means.

And like the USA, most of Canada's infrastructure is well beyond it's sell by date.

But yes, Canada did have the right idea with regulated mortgage lending... and avoided most of the 2008 crash (but they did get bailed out like the rest of the pack

http://business.financialpost.com/news/fp-street/did-canadian-banks-receive-a-secret-bailout). But now Carney's wolves have settled in and there is all kinds of sub prime lending.


Heck. Even a (money pit wooden) house I sold in Canada in 2004 has tripled in price FFS. It is still a money pit and by the look of it needs new cladding, new roof, new windows, all kinds of stuff (its currently on sale again). ( checked... the wages from the job I had at the time have increased in the region of 10-15%, yet housing went up 200%!)

Oh yea, and Canada STILL has feckin terrible holiday entitlement at 16 sad days, two feckin paid weeks off + civics! (USA has zero haha)

Source: I have a Canadian citizenship + UK, live in UK and not going back.

People living in Canada are doing so on borrowed time.

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According to tradingeconomics

Canada's GDP is about 1.785 trillion US dollars (2014 figure).

Canada's private sector credit is about 3.67 trillion Canadian dollars (February 2016 figure) = 2.82 trillion US dollars (1.3 exchange rate).

So that would make private sector debt to GDP ratio of about 158%.

http://www.tradingeconomics.com/canada/gdp

GDP in Canada is reported by the World Bank Group

http://www.tradingeconomics.com/canada/private-sector-credit

Private Sector Credit in Canada is reported by the Statistics Canada

Add in government, corporate and financial institution debt and the ratio for total debt relative to GDP must be over 300%.

Edited by billybong

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So that would make private sector debt to GDP ratio of about 158%.

Above 24,000ft without oxygen i.e. in the death zone.

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